Contents

Background

On November 28, 1961, President Kennedy halted sales of silver by the Treasury Department. Increasing demand of silver as an industrial metal had led to an increase in the market price of silver above the United States government's fixed price. This led to a decline in the government's excess silver reserves by over 80% during 1961. President Kennedy also called upon Congress to phase out silver certificates in favor of Federal Reserve notes.[1][2]

President Kennedy repeated his calls for Congress to act on several occasions, including his 1963 Economic Report, where he wrote:[3]

I again urge a revision in our silver policy to reflect the status of silver as a metal for which there is an expanding industrial demand. Except for its use in coins, silver serves no useful monetary function.

In 1961, at my direction, sales of silver were suspended by the Secretary of the Treasury. As further steps, I recommend repeal of those Acts that oblige the Treasury to support the price of silver; and repeal of the special 50-percent tax on transfers of interest in silver and authorization for the Federal Reserve System to issue notes in denominations of $1, so as to make possible the gradual withdrawal of silver certificates from circulation and the use of the silver thus released for coinage purposes. I urge the Congress to take prompt action on these recommended changes.

Public Law 88-36

The House of Representatives took up the President's request early in 1963,[4] and passed HR 5389 on April 10, 1963, by a vote of 251 to 122.[5][6] The Senate passed the bill on May 23, by a vote of 68 to 10.[7][8]

President Kennedy signed the bill into law on June 4, 1963 and also signed an executive order (11110) authorizing the Treasury Secretary to continue printing silver certificates during the transition period.[9][10] The act, which became Public Law 88-36 (77 Stat. 54), repealed the Silver Purchase Act of 1934 and related laws, repealed a tax on silver transfers, and authorized the Federal Reserve to issue one- and two-dollar bills, in addition to the notes they were already issuing.[11] The Silver Purchase Act had authorized and required the Secretary Treasury to buy silver and issue silver certificates. With its repeal, the President needed to delegate to the Treasury Secretary the President's own authority under the Agricultural Adjustment Act.[12]

Text of Executive Order

President Kennedy's Executive Order (E.O.) 11110 modified the pre-existing Executive Order 10289 issued by U.S. President Harry S. Truman in 1951, and stated the following[13]:

"The Secretary of the Treasury is hereby designated and empowered to perform the following-described functions of the President without the approval, ratification, or other action of the President..."

The order then lists tasks (a) through (h) which the Secretary may now do without instruction from the President. None of the powers assigned to the Treasury in E.O. 10289 relate to money or to monetary policy. Kennedy's E.O. 11110 then instructs that:

SECTION 1. Executive Order No. 10289 of September 9, 1951, as amended, is hereby further amended (a) By adding at the end of paragraph 1 thereof the following subparagraph (j):

'(j) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12, 1933, as amended (31 U.S.C. 821(b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of an outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption,' and (b) By revoking subparagraphs (b) and (c) of paragraph 2 thereof.

SECTION 2. The amendments made by this Order shall not affect any act done, or any right accruing or accrued or any suit or proceeding had or commenced in any civil or criminal cause prior to the date of this Order but all such liabilities shall continue and may be enforced as if said amendments had not been made.

John F. Kennedy, THE WHITE HOUSE, June 4, 1963.

Revocation

E.O. 11110 was not reversed by President Lyndon B. Johnson and the section added to E.O. 10289 remained on the books until President Ronald Reagan issued Executive Order 12608 on September 9, 1987 as part of a general clean-up of executive orders.[14] E.O. 12608 specifically revoked the section added by E.O. 11110 which effectively revoked the entire Order. By this time, however, the remaining legislative authority behind E.O. 11110 had been repealed by Congress when Pub.L. 97-258 was passed in 1982.

In March 1964, Secretary of the Treasury C. Douglas Dillon halted redemption of silver certificates for silver dollars. In the 1970s, large numbers of the remaining silver dollars in the mint vaults were sold to the collecting public for collector value. All redemption in silver ceased on June 24, 1968.

According to author Jim Mars, Executive Order 11110 issued by President Kennedy on June 4, 1963 authorized the issuance of $4,292,893,815 in United States Notes. Mars further asserts that after President Kennedy's assassination, the order was never carried out.

The claim is not borne out by the facts. First, E.O. 11110 had nothing to do with United States Notes, and did not affect any section of law referring to them. Second, E.O. 11110 did not anywhere mention any quantity of money; wherever the $4 billion-plus figure came from, it was not E.O. 11110. Third, The President had no authority to issue such an edict. Even utilizing the provisions of the Agricultural Adjustment Act of 1933, the most the President could issue without statutory authorization was $3 billion.

...

The reason for the move was that the President had just signed legislation repealing the Silver Purchase Act. With this repeal, the Treasury Secretary could no longer control the issue of Silver Certificates on his own authority. However, the issuance of certificates could be controlled under the President's authority. Hence, for administrative convenience, President Kennedy issued Executive Order 11110.

Ironically, the purpose of the order and the legislation was to decrease the circulation of Silver Certificates, with Federal Reserve Notes taking their place.

...

To conserve on the silver needs of the Treasury, President Kennedy requested legislation needed to bring the issuance of Silver Certificates to an end and to authorize the Fed to issue small denomination notes (which it could not at that time). The Fed began issuing small denomination notes almost immediately after the legislation was passed. And in October 1964, the Treasury ceased issuing Silver Certificates altogether. If anything, E.O. 11110 enhanced Federal Reserve power and did not in any way reduce it.